Pilipinas Shell Petroleum Corporation on Thursday, August 13, announced that it would be shutting down its oil refinery in Batangas as it grapples with the effects of the coronavirus pandemic.

In a disclosure to the Philippine Stock Exchange, Pilipinas Shell said that the refinery would be converted into an import and storage terminal. The Batangas refinery started operations in the 1960s.

“We have the technical capability and financial flexibility to manage and adapt to disruptive conditions. Due to the impact of the COVID-19 pandemic on the global, regional, and local economies, and the oil supply-demand imbalance in the region, it is no longer economically viable for us to run the refinery,” said Pilipinas Shell president and CEO Cesar Romero.

In May, Pilipinas Shell announced a month-long suspension of refinery operations.

In addition to shutting down the refiney, Pilipinas Shell said it wouldn’t be declaring dividends for 2020.

Energy Secretary Alfonso Cusi on Thursday said that the refinery’s closure wouldn’t affect the country’s oil supply.

“This…will not affect the oil supply in the country as they will continue to fill in their market share through import of refined products,” Cusi said.

“What saddens me is the plight of the workers that will be displaced due to the closure. I hope they will find employment with the other industry players,” Cusi added.

Deeper losses

Pilipinas Shell deepened its half-year losses to P6.7 billion, reversing its P3.7-billion profit in 2019. It attributed the losses to the oil demand crash and the plummeting of oil prices.

The oil firm said that the inventory losses amounted to P5.8 billion, as world oil prices crashed to $20 per barrel in April. Travel bans affecting the aviation industry similarly affected Pilipinas Shell, as the volume of sales dropped by 43% for the period.

Pilipinas Shell’s half-year revenues fell to P74.03 billion from last year’s P109.66 billion, with costs overtaking its sales to P75.92 billion.

Despite narrowing its losses in the second quarter to P1.2 billion, Pilipinas Shell said it remained cautious for what’s to come.

“Despite seeing volume and earnings recovery in the months of May and June, the corporation remains cautious given the spike of COVID-infected cases in the country and the consequent decision to place Metro Manila, Bulacan, Cavite, Laguna, and Rizal under modified enhanced community quarantine (MECQ) again,” the oil firm told the local bourse.

Metro Manila and nearby provices were placed under a modified lockdown from August 4 to 18, halting mass transportation and limiting people’s movements. – Rappler.com